Gas is crucial to SA’s growth prospects

Sep 30, 2015

Natural gas must play a major role in South Africa’s future energy mix, according to a new report from Econometrix.

“Gas is necessary for South Africa to meet its target growth rates and political, economic and social objectives,” says Econometrix MD Rob Jeffrey. “There should be a national plan to substantially increase the use of gas.”

Creating a natural gas sector would unlock billions of rands of investment while stimulating new industries and skilled job creation.

Combined with the right policies, an additional 8,600 MW of electricity from gas could see GDP grow by R645-billion, with the creation of up to 1,72-million jobs, according to the Econometrix report: “The future role of gas in SA’s power and industrial development mix”. The report was commissioned by Delta Natural Gas, a gas company started by South African industrialist Aldworth Mbalati in 2014.

“Power generation with gas is a proven technology which contributes to improving grid stability whilst reducing South Africa’s carbon emissions,” Mbalati says. “Gas must be an essential part of whatever energy mix SA chooses, and it forms the basis of industrial development in its own right.”

Gas is the cheapest alternative to coal and nuclear, offering security of supply at competitive prices, Econometrix says. It would supply reliable power for peak demand periods or when renewables are not generating electricity, and adds to the essential reserve capacity.

It was technically and commercially feasible to rapidly start gas-fuelled power generation at Coega in the Eastern Cape, and Saldanha Bay or Mossel Bay in the Western Cape. Other potential locations are Richards Bay in KwaZulu-Natal, and Sishen in the Northern Cape. Mbombela in Mpumalanga has potential to be supplied by pipeline from Mozambique.

For each location, developing a natural gas industry with R15bn annual turnover could see downstream annual turnover up to R50-billion, with R26-billion total added economic value. Average upstream and downstream potential employment created could peak at 70 000 during the mature phase of the project’s life, Econometrix says.

Other significant economic benefits including R2bn savings from diesel imports, increased tax revenue, and curtailment of future electricity price increases – all with a positive impact on the fiscus.

“Gas must play an important role in the energy mix going forward if South Africa is to meet its economic, political and social objectives of reducing poverty, reducing inequality and raising the standard of living of all its citizens,” Jeffrey says.